Stumbled onto Off Market Rehab/Seller Finance possible deal

[Eliot M.]

Hey all.  Not trying to be lazy here but time may be of the essence on this one and I don't know where else to research/get timely help.  My strategy up to this point has been buy and hold rentals, and not really been fixer-uppers, or off-market deals, or seller financed deals, but I may have stumbled onto a possible deal that may be all three.  I was wondering if I could get some advice here because I have not yet read books on seller financing (it's not part of my plan) and don't really know where to go.

Deal Details: the owner's house is probably worth $130k-$150k ARV. The house needs some repair work but I have not seen it in years. I know for a fact that it has a new roof, but needs some foundation work, plus interior work on bathrooms. I hope to have all details/quotes/timeline on what the rehab will entail/cost but let's say it's gonna be near $30k. The outstanding balance on the owner's mortgage is $70k and I could probably buy it for close to that. So I'd have $100k in it, so that's 66% of ARV.

The house is an emotional drain on the owners and they may step away altogether for the $70k and that would be fine, however I have an inkling that I may be able to sweeten the deal for them by giving them a cash flow stream into their retirement.  This would happen via seller financing.

I also know for a fact that they could pay off their mortgage tomorrow if they wanted.  So I was thinking they could pay it off, then seller finance back to me.  The only thing is, like I said, I have no idea how to structure a deal like this.  

For those who are versed in this type of deal, what would be your offer to them?  

Also, would a traditional lender finance this deal, keeping in mind that it needs $30k of work?  My credit, income, debt-to-income is all stellar.  Banks would have no trouble financing to me on a normal purchase, I'm just curious about fixer-uppers.  It may be that the owners would prefer to just walk away from this for the $70k, in which case traditional financing would be my preference.

I was also thinking about offering another option to them: I lend them $ at a specified interest rate for them to get the repairs done, then sell.  When they sell, I get my $ back + interest, plus share in a % of the profits at close.  They are open to this, as I've already suggested it.  Just wondering which of these options seems best?  

My take on the seller's personal preferences:

1st preference: walk away from the house tomorrow for $70k.

2nd preference: owner finance to me and have a steady stream of cash into retirement

3rd preference: borrow $ from me and then sell, sharing profits with me.